Q&A: James Beshara, co-founder of Crowdtilt and Crowdhoster, on helping us all raise money

Indiegogo and Kickstarter have forever changed how people raise money for creative projects. Launched in 2008 and 2009, respectively, millions of people have used the sites to realize their creative dreams. But what about the people who want to crowdfund for, say, a beer pong tournament? Or a night on a party bus? These poor fun-loving souls have, until recently, been left off the crowdfunding train, so to speak.

Enter Crowdtilt. Co-founded by James Beshara in 2012, Crowdtilt helps people pool money together for anything from pool parties to political campaigns – things Kickstarter and Indiegogo don't allow their platforms to be used for. Crowdtilt takes a 2.5% cut, which is lower than average, in hopes not to deter people from financing every scale of event (think a Friday night out on the town to a down payment on a house).

Inspired by their rapid success, the Crowdtilt team launched Crowdhoster in August 2013. It's the first free, customizable crowdfunding platform which allows users total control of their brand, funding goals, URL hosting, and communications. This means users don't need to use predetermined metrics or graphics. They can design the site to their needs and keep all of the profits.

As a true supporter of open source technology, Beshara says, "Almost by definition, we can’t know all the ways Crowdhoster will be used. We’re just as interested as everyone else to find out."

The fact is, we've barely taken baby steps when it comes to crowdfunding. While beer pong tournaments might sound inconsequential, how groups spend their money is anything but.

Only a year-and-a-half-old, Crowdtilt has already been asked to revamp fundraising platforms for organizations as established as the Federal Emergency Management Agency (FEMA). And Beshara is making some exciting announcements soon about partnerships with household brands. It could just be that pooling funds on the Internet will become more common than writing a check far sooner than most predicted.

Tell me about how the idea for Crowdtilt
came to you.

My
background is actually in development economics, which is very different than
the startup realm.

I did a
research fellowship in Rwanda, Uganda, and South Africa and while I was working
in poverty alleviation I saw a really cool opportunity to allow people to
invest in group loans to organizations working in microfinancing. This was before
crowdfunding went mainstream – I didn’t even know what it was.

I built the site Dvelo.org [now defunct]. People could lend money to a microfinance organization and earn a return, but
more importantly get their friends and family involved and group their funds
together.

When I moved
back from South Africa in 2011, I got the idea for Crowdtilt. Crowdtilt allows
people to pool money for anything – it’s not specific to poverty alleviation or
creative projects.

The concept
for Crowdtilt harkened to this quote I heard from Evan Williams, the founder of
Twitter. When asked about what Twitter’s
revenue model would be he said, “I don’t know. All I can say is the reason
we’re building this is that we think if a million people like long-form
blogging, than maybe 20 or 30 times that will like this bite-size blogging
called Twitter.”

That stuck
with me. I thought, “If a million people like long-form $40,000 documentaries
on Kickstarter, then maybe 20 or 30 times that will like bite size crowdfunding
– $400 for a fantasy football league, $1,400 for a party bus to Napa, $40,000 for a really awesome group
vacation."

Even back
then in 2008 it felt like the next layer of the web was going to allow
collective action at levels we’d never seen before. Obviously around
communication, but that was already happening. The next layer was going to
allow us to collaborate on how we spend our money.

Let’s talk about open source philosophy.
Looking at the rapid popularity of Crowdtilt and Crowdhoster, it’s shocking
this hasn’t happened earlier.

As a
developer and product designer, you become dependent on the open source
community. So you always look for ways to give back.

More
relevant to Crowdtilt, we feel crowdfunding is where blogging was 10 years ago.
There is going to be a huge need for the Wordpress of crowdfunding – an enterprise
grade tool that allows you to customize, brand, and host your own crowdfunding
campaign.

There are
three areas that crowdfunding has left relatively untouched: One, civic
crowdfunding. Projects you care about in your city from a toll road on the
private side to a park project on the public side. Two, political crowdfunding.
If Hillary Clinton wanted to raise money for her presidential run, crowdfunding
would be a natural fit. But what tool would she use? Kickstarter restricts politics.
But more than that, she would likely not use Crowdtilt.com, she would use her
own brand.

Lastly, the
area that I think will take to crowdfunding the most over the next two or three
years will be commercial crowdfunding.

What does commercial crowdfunding look like?

If you think
about Nike wanting to bring back the Jordan 1, what kind of tool would they
use? They could do it by telling everyone, “We’re launching the Jordan 1 next
month, go to your local Foot Locker,” or they could make use of a digital tool
like Crowdhoster, do it online, and allow people to participate in the creation
process of bringing this iconic shoe back into production. This would also mitigate
their risk. They get the efficiency of knowing exactly what the demand is to the pair. That type of information is
invaluable to a maker of any kind.

The
mechanics of crowdfunding are too damn powerful for it to remain in the hands
of independents and amateurs. Crowdfunding is seen as a toy like blogging was
10 years ago. But what we’ve seen with blogging is that it didn’t stay with
independents – these tools are now powering CNN.com and The New York Times.

Tools like Crowdhoster are arguably the
next iteration of raising money through online crowdfunding. Did you use a
crowdfunding model to introduce Crowdhoster?

We didn’t. It
started as a blog post. Crowdtilt wrote about the idea for an open source,
customizable, free tool that could power crowdfunding locally and internationally.
We received a ton of interest – including an email from Soylent, a nutritional
drink company that was an Internet craze at the time.

Soylent had
been rejected from Kickstarter and they didn’t want to build their own crowdfunding
software. They asked if our tool could be ready for them by the following week.
We worked through the night, three nights in a row.

That was our
first Crowdhoster project. As of last week they’ve surpassed $2 million dollars
in orders and it’s one of the top crowdfunding campaigns of 2013. It’s larger
than any Indiegogo campaign to date. Indiegogo is five years old. Crowdhoster
is five months old.

Kickstarter and Indiegogo have clear delineations
around who can use their services. You’ve left this wide open. Have you ever denied
a user based on a political or ideological difference? Do you predict this kind
of problem coming up in the future and if so, how would you deal with it?

We haven’t denied
anyone. Right now you go to Crowdhoster.com and let us know what you want to
build. We get in touch with you and help you launch it. But in about two weeks
it will be even easier. You’ll be able to just fill out a couple of fields and
click “launch.”

I foresee it
as being open and remaining open, true to open source philosophy. There will also always be a free version of Crowdhoster. Certain products
don’t align with our credit card processing service provider – like firearms
and pornography. They might even be legal but they won’t be processed. But the
software allows you to plug in your own credit card processing and you’re up and
running.

We will not
restrict campaigns thematically. That goes against the purpose of building
this.

Do you secretly lie awake at night hoping a
major porn boss is not going to use Crowdhoster?

So much goes
into running a company and building these types of tools. My co-founder and I
specifically set out to benefit the people around us. There are so many things
that could go wrong. There are many sleepless nights just making sure what
we’re building is really good.

Crowdtilt
was in the news about three months ago in a pretty big way. Residents in
Oakland were Crowdtilting extra security. Salon, Gawker, Slate, and Financial
Times in England wrote about it. The Salon article talked about the
implications for citizens if this trend continues. If crowdfunding spills into
our daily lives, will the wealthy crowdfund services that the poor can’t? That’s
a valid argument.

We were
getting bombarded with people asking, “Is this good for society?” It’s
something we’re constantly thinking about. If groups can collaborate around
producing anything with their wallets, then where will certain groups take this
technology?

Our belief
and hope is that crowdfunding will end up being a source for good – a tool that
groups do amazing things with as opposed to use for nefarious purposes.

What’s next for Crowtilt and Crowdhoster?
Any exciting news?

We can
finally announce that we’re collaborating with FEMA to power their disaster-relief fundraising efforts. It floored us when we got the inbound request from
them. For a year-and-a-half-old product, I still pinch myself that we’re
building this tool. It’s a great example of where we feel this is going. FEMA
wants to focus on the logistics of disaster relief. They don’t need to focus on
building the world's most refined and easy-to-use fundraising portal.

Thank You

By registering you become a member of the CBS Interactive family of sites and you have read and agree to the Terms of Use, Privacy Policy and Video Services Policy. You agree to receive updates, alerts and promotions from CBS and that CBS may share information about you with our marketing partners so that they may contact you by email or otherwise about their products or services.
You will also receive a complimentary subscription to the ZDNet's Tech Update Today and ZDNet Announcement newsletters. You may unsubscribe from these newsletters at any time.